The drop has seen Uganda’s main export over the last five years witness a dip in fortunes, and led to a realignment of the country’s trade balance, all of which has contributed to the depreciation of the local currency.
Nalumu said that their provisional data with UFZA indicated that Uganda’s export earnings from the zones dropped to $78 million in the financial year 2021/22. During financial years 2019/20 UFZA registered $150 million and $1.2 billion in financial year 2020/21 in export earnings. She was speaking at a meeting organized by Uganda Free Zones Authority held at Imperial Royale hotel in Kampala.
Nalumu blamed the drop in the export earnings on the levy that the government of Uganda introduced on gold exports, one of the major export earners from the free zones. Effective July 2021, the government of Uganda imposed a five per cent levy on every kilogram of refined gold and a 10 per cent levy on every kilogram of unprocessed gold for export. In protest to the levy, the gold exporters held back on their gold stock.
According to June 2022 data from Bank of Uganda, the country did not register any gold exports between July 2021 and April 2022. This was the first time within the last six years that Uganda had not registered any gold exports.
From the financial year 2018/19 to the financial year 2020/21, export earnings from gold averaged at least $1.5 billion yearly, making it the country’s top export earner. This was against coffee export earnings, long the country’s tradition export, which averaged at $489 million annually.
At the start of the financial year 2021/22, coffee rebounded to become Uganda’s major export earner. During the same period, the levy on gold exports was taking effect. Asked what the authority was doing to do to address the drop in export earnings, Nalumu said: “The immediate impact of the levy has been negative.
However, engagements with the ministry of finance, the Uganda Revenue Authority, and other policymakers are underway. The discussions shall ensure that a more acceptable levy is put in place.”
She predicted that “this will encourage the licensed companies to process their gold and also sell it to their respective buyers. We anticipate the ongoing engagements with the different stakeholders will be able to address this anomaly. I expect that we shall have the gold industry revamping during the financial year 2022/23.”
Nalumu feels that the rebound in the gold industry will lead to more processing of minerals We shall also see more mineral processing. We have been able to attract investments into the mining of our gold. We anticipate that there shall be a revamping of the operations in the mining industry during this financial year.”
Uganda has majorly been exporting refined gold bars to the United Arab Emirates. However, much of Uganda’s gold exports, according to UFZA data, are re-exports from Zimbabwe, Tanzania, the Democratic Republic of Congo, etc.
The leading refineries in the free zones are Simba Gold Refinery, Metal testing and Smelting, and Aurnish trading company. Gold has been accounting for more than 93 per cent of UFZA’s export earnings, with tobacco, flowers, horticulture, wood, etc accounting for the rest.
UFZA was established in 2014 to create opportunities for export-oriented investment and job creation. Under the free zones, different gazetted geographical areas are exempted from customs duties and related internal taxes applicable.
UFZA’s mandate is to oversee the establishment, development, management, marketing, maintenance, supervision, and control of free zones in Uganda and to provide for any other related matters. Some of the free zones in Uganda are located in Wakiso, Entebbe, Kasese, and Soroti.
inarticle} inarticle}
